RBI Proposes Unique Transaction Identifier (UTI) Mandate for OTC Derivatives to Strengthen Financial Oversight
SDG 9: Industry, Innovation, and Infrastructure | SDG 17: Partnerships for the Goals
Institutions: Reserve Bank of India (RBI) | Ministry of Finance
The Reserve Bank of India (RBI) has released a Draft Circular proposing to make the use of a Unique Transaction Identifier (UTI) mandatory for all Over-The-Counter (OTC) derivative transactions in India. The proposal, released on October 23, 2025, is scheduled to take effect from the next financial year, beginning April 1, 2026.
The UTI proposal applies broadly across key segments of the financial market, including:
Rupee interest rate derivatives.
Foreign currency derivatives and foreign currency interest rate derivatives.
Forward contracts in Government securities and credit derivatives.
Each UTI will be up to 52 characters long and will incorporate the Legal Entity Identifier (LEI) of the generating entity. Market participants will be responsible for ensuring compliance and reporting the UTI for every transaction throughout its lifecycle. The RBI has invited comments on the draft circular from banks, market participants, and other interested parties by November 14, 2025.
The mandatory adoption of the UTI represents a crucial step in fulfilling India’s commitment to the G20 framework for improving financial data quality and risk management. By mandating a standardized identifier that complements the already implemented LEI, the RBI is strengthening the surveillance capabilities of the domestic financial system. This improved transparency is vital for proactively identifying systemic risks, maintaining the stability of the Rupee and government securities markets, and bolstering India’s position as a robust and modern global financial center.
What is an OTC Derivative? → Imagine an OTC derivative as a customized financial insurance policy that two people or companies write up and agree to privately. It’s a contract whose value is tied to the future price movement of something else—like the price of the Indian Rupee against the US Dollar, or the interest rate on a loan. Companies (like large exporters or manufacturers) use these to manage risk (hedge). For example, a company expecting a large payment in US Dollars in six months might use an OTC contract to lock in today’s exchange rate, insuring themselves against the Rupee getting stronger later.
What is the Objective of the Unique Transaction Identifier (UTI)?→ The UTI is a single unique reference number for a derivative transaction that enables global aggregation of transactions, allowing policymakers to obtain a comprehensive, system-wide view of the OTC derivatives market. This aligns with international standards for market reporting designed to enhance risk management and financial stability following the Global Financial Crisis.
Follow the full update here: RBI releases Draft circular on Unique Transaction Identifier for OTC Derivative Transactions in India